ECON 103 Lecture Notes - Lecture 4: Demand Curve, Unit, Normal Good

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jadeporcupine414

19 Oct 2017

School

Simon Fraser University

Department

Economics

Course

ECON 103

Professor

Marie Rekkas

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Document Summary

Chap 4: elasticity ex. taking a cab at 2pm vs 4am. More responsive to a price change @ 2am because we need to take a cab at 4am no matter what. Dependent on the slope: if demand curve is steep - price rises by a lot if demand curve is almost flat - price barely rises. Price elasticity of demand: measure of responsiveness of quantity demanded of a good to change in its price (when everything else remains the same) Price falls by & quantity demanded increases by 2 pizzas/hr. Avg quantity demanded is 10 pizzas / hr. Demanded changeq/qave x 100, which is (2/10) x 100 = 20% Changep/pave x 100, which is (/) x 100 = 5% When # of good rises, quantity demanded decreases. B/c positive change in price brings a negative change in quantity demanded. Demand can be inelastic, unit elastic, or elastic (range from 0-in nity)

Related Questions

interval (or arc) elasticity

cross-price elasticity

price elasticity of demand

elastic demand

income elasticity

inelastic demand

inframarginal units

marginal revenue

point elasticity

price effect

quantity effect

total revenue

unitary elastic demand

1. __________________ A measure of consumersâ sensitivity or responsiveness to changes in the price of a good or service.

2. ___________________ When the percentage change in price (in absolute value) is more than the percentage change in quantity demanded (in absolute value).

3. ___________________ When the percentage change in quantity demanded (in absolute value) is more than the percentage change in price (in absolute value).

4. ___________________ When the percentage change in quantity demanded (in absolute value) is just equal to the percentage change in price (in absolute value).

5. ___________________ Total amount paid to a producer for a good or service P * Q.

6. ___________________ The effect on total revenue of a change in price, holding quantity constant.

7. ___________________ The effect on total revenue of a change in quantity, holding price constant.

8. ___________________ An elasticity calculated over an interval of a demand curve or demand schedule.

9. ___________________ Elasticity at a specific price or point on a demand curve.

10. ___________________ A measure of how responsive quantity demanded is to a change in income, all other things constant.

11. ___________________ A measure showing how responsive the quantity demanded of one good is to changes in the price of another good, other factors constant.

12. ___________________ The additional revenue received by producing and selling one more unit of output.

13. ___________________ Units of output that could have been sold at a higher price had the firm not lowered its price to sell additional (marginal) units.

coffeehornet269

a. If a 10 percent increase in price decreases the quantity demanded by 12 percent, the price elasticity of demand is ____________.

b. The price of strawberries falls from $1.50 to $1.00 per carton and the quantity demanded goes from 100,000 to 200,000 cartons. Calculate the price elasticity of demand and interpret it in words.

c. At the present level of consumption, 4,000 movie tickets, and at the current price, $5 per ticket, the price elasticity of demand for movie tickets is 1. Calculate the percentage by which the owners of movie theaters must reduce the price in order to sell 5,000 tickets.

d. The price elasticity of demand for ice-cream sandwiches is 1.2 at the current price of $0.50 per sandwich and the current consumption level of 100,000 sandwiches. Calculate the change in the quantity demanded when the price rises by $0.05.

e. Calculate the price elasticity of supply for web-design services when the price per hour rises from $100 to $150 and the number of hours transacted increases from 300,000 to 500,000. Is supply elastic, inelastic, or unit elastic?

crimsonhamster810

1. Suppose the price elasticity of demand for bread is 1.00. If the price of bread falls by 20%, the quantity demanded will increase by:

2. Suppose that a 20% decrease in the price of good Y causes a 20% increase in demand for good X. The coefficient of cross-price elasticity of demand is:

3. When the price of a quart of milk increased from $1.55 to $2.00 the quantity demanded decreased from 21,000 per day to 19,000 per day. In this range, the price elasticity of demand is:

4. If the elasticity of supply for crude oil is 0.5, how much will the price have to increase to increase production by 20%?

5. Demand for X increases from 100 to 125 when the price of Y increases from $5 to $6. The cross-price elasticity of demand is:

6. Demand for X increases from 100 to 125 when the price of Y increases from $5 to $6. The cross-price elasticity of demand is:

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ECON 103 Lecture Notes - Lecture 4: Demand Curve, Unit, Normal Good

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